Google confirmed the Chinese government's decision in an update to a June blog post that described plans to stop redirecting Google users in mainland China to Google's servers in Hong Kong.
"We are very pleased that the government has renewed our ICP license and we look forward to continuing to provide web search and local products to our users in China," the company said.
Google CEO Eric Schmidt predicted that the license would be renewed at an industry conference in Sun Valley, Idaho on Thursday, a feat that suggests Google is developing stronger backchannel relationships with Chinese officials.
The news has buoyed Google's stock, lifting the price almost 2% on Friday, and should also serve to reassure Western businesses that the challenges of operating in China are not insurmountable.
Google appears to have succeeded in repairing some of the damage done by its decision to stop censoring search results for mainland Chinese users, a move that put an end to Google.cn as a search site.
China requires that Internet companies censor search results and Google's refusal to continue doing so, a response to a sophisticated cyber attack on Google from China last year, was widely seen as a provocation.
In an effort to continue to providing search results to the mainland China market, Google opted to automatically redirect Google.cn visitors to Google.com.hk, which is not subject to the same censorship requirements.
But China authorities indicated that automatic redirection was not acceptable. So last month Google said would replace its automatic redirection mechanism with a static link to its Hong Kong site in order to appease regulators who had made it clear that the company's ICP would not be renewed if the redirection continued.
Despite the thaw in relations, Google still faces obstacles in China. Many of its services are still partially or fully blocked in China. Just over a week ago, Google's query auto-completion service, Google Suggest, stopped working in China and the service appears to be blocked still.
Google is also seeking permission from China's State Bureau of Surveying and Mapping to offer Google Maps in China. A decision about Google's mapping license is expected soon.